The Great Recession: Four Vendor Responses for Partners

Since late September, the miserable economy and all its implications have been the only things on the minds of, well, everyone. The talented people who run the top software partner programs across the industry are no different. The partners that these people cater to are no different. Our large software vendor clients have been asking IDC for months what we’re seeing in response to the economic downturn. And my answer so far? Nothing earth-shattering really. 

Some recent vendor conversations confirmed my thoughts on this. I think every vendor expected that every other vendor would be planning some major partner-facing initiatives to battle the economy. But in reality, if there was some magical program to boost sales for partners, why wouldn’t it have launched years ago?

Perhaps the most obvious thing that software vendors have done has been to offer even better incentives to partners, with the hope that the extra motivation will result in more sales. This is always a difficult tactic as everyone is pretty much in the same boat. Customers are often postponing decisions for several months at a time, or have budget reductions of 50% or more. The extra 5 points that a vendor is willing to give a partner is welcomed, but often not enough to make the deal.

Financing 

A few of the largest companies have been offering financing for hardware, software, and even partner services for a while now. This type of total solution financing (especially the partner services element) isn’t something that a distributor or regular financing company is willing to get involved with. Now is the time that many partners might start taking them up on financing more and more. Both Microsoft Dynamics and SAP announced 0% financing late last year to sweeten the pot in response to the downturn.

Similar to the way financing can turn one big lump sum payment into a stream of more manageable payments, vendors and partners are looking to other consumable delivery and pricing models that allow customers to use Operating Expense (OpEx) budgets versus Capital Expense (CapEx) budgets to pay for solutions. SaaS and outsourced / managed services are the best examples of this. Cloud-based services that can be paid for on a monthly basis represent a more attractive purchasing option for many companies who can’t foot the bill for a large on-premise solution up front. Service provider licensing agreements where the partner pays the vendor only for what software was used each month, could prove to be more and more popular as an option in this economy.

I have also seen a lot of re-packaging of communications of late. In a few cases, vendors have said, “Here’s how we’re going to help you out in response to the economy…” And their answer has not exactly been anything new, but rather a re-packaging of offerings that partners had access to anyway. Vendors may package up financing with sales assistance with business planning with suggested cost-saving solutions and call it an “Economic Response Package for Partners,” or something like that. I don’t blame vendors for taking this seemingly easy way out. It’s very difficult to create something net new in response to the economy that really works. And the fact is, most partners don’t use, or don’t even know about, the majority of useful benefits that vendor partner teams have to offer. I’m sure we’ll hear more from vendors in response to the economy.

Let me know if you do hear of something interesting. But maybe the downturn is the opportunity for some partners to re-tool, and finally look under the covers of the partners programs they have been members of for years, and discover what free and discounted resources are available to them. We have been investigating partner programs in-depth for almost a year now and there is a lot of value out there for partners.